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(Alliance News) - Witan Investment Trust PLC said Tuesday it underperformed considerably against its interim benchmark, so much so that the investment trust has restructured its portfolio to better reflect the global climate.
For the six months to the end of June, the investment trust reported a net asset value negative return of 14.7%, compared to its benchmark - to be 15% weighted towards the FTSE UK All Share Index and 85% towards the FTSE All World Index. This composite benchmark made a negative return of 2.1%.
Witan's net asset value per share as at June 30 dropped by 15% to 200.3 pence from 236.9p at the end of December. The trust share price at the end of June was 184.0p, reflecting a 5.9% discount to net asset value.
Shares in Witan Investment Trust were up 1.9% at 190.49 pence on Tuesday in London.
The trust said that its portfolio was very badly hit by two factors. The first was that it was positioned for expectations of the US and China patching up their trade differences, and the world economy to achieve moderate growth.
In being sensitive to the economic climate, Witan's portfolio was badly hit by the shock of the Covid-19 pandemic, and the widespread economic lockdown that occurred as a result.
The second reason was that the portfolio had been heavily weighted towards Europe and the UK which did poorly, and underweighted in the US, where stocks did better.
Looking ahead, Witan has altered its strategic asset allocation with effect in January to 85% Global and 15% UK.
The trust declared an interim dividend of 2.68 pence per share, up 14% from 2.35p the prior year.
"Although global equity markets have recovered much of the ground they lost, the recovery has been narrowly based. Technology and defensive sectors have done well, offsetting substantial losses by many other sectors. Although part of this is due to a reassessment of longer-term prospects, it also reflects a lack of confidence in the timing and degree of cyclical recovery," said Chair Andrew Ross.
"Until there are more effective therapeutic treatments for Covid-19, or a vaccine, recovery hopes will remain vulnerable to secondary outbreaks, which might become more common as lockdown measures are gradually eased," Ross added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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